Gold Warning - Financial Reporting Of U.S. Citizens Coming. Will It Include Gold?

Commodity Futures Trading Commission New Regulations Reporting Overseas Transactions

Since the start of the credit crunch in mid-2007 we have seen a steady move forward by government to place greater control over the financial aspects of people’s lives. One of the biggest milestones from an investor’s point of view has been the establishment of the Foreign Account Tax Compliance Act (FATCA). This is consistent with the intentions expressed by President Obama that U.S. Citizen’s financial successes at home and abroad should be subject to U.S Taxation so that the U.S., as a nation, can benefit. The Patriot Act was the first to employ this approach but now we are moving several steps forward from these measures.

Right now one of these steps has come from the Commodity Futures Trading Commission, which has written and must approve some very contentious provisions. One of these has been an agency proposal, which is intended to go into full effect as early as mid-July, requiring overseas offices of American-based banks, foreign institutions and hedge funds to turn over information on foreign trades if they involve United States customers, or are guaranteed by a financial institution with American ties, requirements that the industry calls redundant and excessive.

Some of the strongest objections have come from foreign regulators, including officials from Britain, Russia, Japan and Germany, who complained about the plan last month in a letter to Treasury Secretary Jacob J. Lew. Global markets, they said, “will not be able to function under such burdensome regulatory conditions,” advocating instead that the United States agree to respect rules each nation adopts, assuming they are reasonably compatible.

Whichever way the discussion goes, one thing is for sure: U.S. Taxpayers overseas financial activities will have to be reported in the future. This is why Swiss banks and vaults are rejecting U.S. Taxpayers as clients. Those foreign institutions cannot be controlled within the U.S., but what can make them obey is the threat to any U.S.-based assets Swiss banks or Vaults have there. To protect their U.S.-based income, the best way to achieve this is to ensure they don’t venture into the danger zone of U.S. Jurisdiction on such matters.

Ostensibly, the reason for wanting to receive reports about U.S. financial activities is to ensure taxes are paid by U.S. citizens, whether at home or abroad. As intelligent readers, we suggest you think about other ways that the government can use such reports.

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